The satellite business may finally be headed into orbit. For most of the evolution of the American television industry, satellite TV was no more than a blip on the screen. For almost two decades, cable and over-the-air broadcasters had the battle for the nation’s 100 million TV homes largely to themselves. And what a fight it’s been, with years of brutal and costly clashes stretching from the marketplace to the halls of every branch of the federal government. Along the way, cable has consolidated into a handful of mammoth companies, including Tele-Communications Inc., Time Warner and Comcast, which have wired America community by community, carving out local monopolies. And the most powerful broadcasters–NBC, CBS and ABC–have themselves been swallowed by corporate giants.
Meanwhile, direct-broadcast satellite TV, or DBS, seemed content to nibble on table scraps. As broadcast and cable pummeled each other, satellite dishes quietly began sprouting in the countryside and backwoods starting in 1980. Then, in 1994, the digital age arrived, ushering in a generation of small dishes and higher-quality service, including crystal-clear pictures and CD-quality sound. And cable rivals suddenly learned that DBS was no longer the industry’s country bumpkin. Satellite companies, including Hughes Corp.’s DirecTV and U.S. Satellite Broadcasting, today claim 6.7 million subscribers, or about 10 percent of cable’s customer base. Although the equipment and subscription fees run to hundreds of dollars, digital technology gave DBS a quality advantage, forcing cable companies to scramble to introduce digital service of their own. Now Murdoch’s big bet proclaims that DBS has really arrived. “We will create a dynamic and promising new competitive force,” he de-dared at last week’s public briefing.
That’s not just media-mogul bombast. Since a British satellite-TV venture nearly bankrupted Murdoch’s family-controlled News Corp. several years ago, he has staged a dramatic recovery, emerging as the world’s sole international satellite-TV baron. Under the global brand name Sky, his orbiting empire rains a torrent of TV channels down on Earth, from China to Britain to Mexico. Last week’s stroke, says media dealmaker Michael Garin, “was a brilliant, bold move that does what Rupert always tries to do-change the basic competitive battlefield.”
To Murdoch’s legion of critics, though, his real advantage is his willingness to stretch the limits of regulation. He has a reputation for deftly currying favor with government leaders worldwide to advance his media and entertainment business interests. His broadcasting rivals still grouse that he bent foreign ownership rules to break into the U.S. television business with his Fox network in the mid-1980s. Already, his cable-TV rivals are preparing an assault in Washington on Murdoch’s new satellite TV venture. They will argue that he’s hogging too many of the satellite transponders available for beaming channels into the U.S. There surely will be a reopening of the foreign-ownership issues raised by Australia-based News Corp.’s stake in the new venture with EchoStar. Local TV stations also are apt to jump into the fray to fuss over how Murdoch’s service distributes their broadcast signals. “Everyone wants to start running around screaming bloody murder,” declares a senior Murdoch executive. “Cable would just like to maintain its monopoly.” It may be a battle between heaven and Earth, but it’s far from clear who’s on the side of the angels.
